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Thread: Deposit Management and Capital Management

  1. #1
    Trader rinaji's Avatar
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    Deposit Management and Capital Management

    Today I made ​​a light topic to discuss, about trade using a stop loss or cut loss. We have too much discussion about the importance of stop loss and risk management, it is 100% true, we must agree that the stop loss and risk management is essential to minimize the risk.

    Do you agree with this...

    No Stop Loss = No Risk Management?

    It is a simple and easy question to answer, maybe we will find many traders who agree with the above sentence.

    But ...., should not be so, money management is not only for the balance in the account, but for all of our capital, (on the account, in payment processor, in the Bank, or in your pocket, and others). At its core is the management of all of your capital.

    I've been trading with risking 100% of deposits, but I have a risk management, yes of course.

    Suppose I have a $ 1,000 capital.
    I have a trade plan with a maximum risk of 10% (of the total capital) per trade. That means I take $ 100 risk for each trade position.

    Well, in general, we will use this way ....
    We made ​​a $ 1,000 deposit. We use a stop loss or cut losses when equity was reduced by $ 100 or 10%. It is a common way. And other people will think that we are really good in applying risk management. Of course...

    So what if we do this way ...
    We split our capital into 10 deposit @ $100. We made ​​a $ 100 deposit, the remainder ($ 900) is stored in the payment processor, or bank, or our pockets. And we do the trade without a stop loss / cut loss. If we get stopped out, then we make a new deposit ($ 100), and so on.
    Perhaps some people may believe we are risking 100%, yes we understand them, because they only see from the management of deposits, not capital management.

    Conclusion: Do not think that risking 100% deposit is mean without risk management. So if you see me getting stop out (usually I trade without a stop loss), you do not think that I am risking 100% of capital. I am only risking 100% of deposits. This could mean only risking 10% of my capital, or 5% capital, because I always split the deposits into multiple parts.

    Another example:
    Suppose I have $ 1,000. and I split into 10 deposits @ $ 100. Well, if I set 10% risk (of the initial balance) per trade. Or $ 10 per trade. This means that we set 1% risk (of total capital) per trade. Equivalent to $ 10.
    10% risk of initial balance ($ 100) = 10% * $ 100 = $ 10. This is if we calculate in deposit management.
    1% risk of total capital ($ 1,000) = 1% * $ 1,000 = $ 10. This is if we calculate in capital management.

    It is a simple way to understand capital management, maybe I'll make a topic about cash flow management in the other thread. I think we should actually do forex trading as a professional business, not just about market analysis.

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    If you lose, be patient. If you win, stay humble

  2. #61
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    Quote Originally Posted by rinaji View Post
    Today I made ​​a light topic to discuss, about trade using a stop loss or cut loss. We have too much discussion about the importance of stop loss and risk management, it is 100% true, we must agree that the stop loss and risk management is essential to minimize the risk.

    Do you agree with this...

    No Stop Loss = No Risk Management?

    It is a simple and easy question to answer, maybe we will find many traders who agree with the above sentence.

    But ...., should not be so, money management is not only for the balance in the account, but for all of our capital, (on the account, in payment processor, in the Bank, or in your pocket, and others). At its core is the management of all of your capital.

    I've been trading with risking 100% of deposits, but I have a risk management, yes of course.

    Suppose I have a $ 1,000 capital.
    I have a trade plan with a maximum risk of 10% (of the total capital) per trade. That means I take $ 100 risk for each trade position.

    Well, in general, we will use this way ....
    We made ​​a $ 1,000 deposit. We use a stop loss or cut losses when equity was reduced by $ 100 or 10%. It is a common way. And other people will think that we are really good in applying risk management. Of course...

    So what if we do this way ...
    We split our capital into 10 deposit @ $100. We made ​​a $ 100 deposit, the remainder ($ 900) is stored in the payment processor, or bank, or our pockets. And we do the trade without a stop loss / cut loss. If we get stopped out, then we make a new deposit ($ 100), and so on.
    Perhaps some people may believe we are risking 100%, yes we understand them, because they only see from the management of deposits, not capital management.

    Conclusion: Do not think that risking 100% deposit is mean without risk management. So if you see me getting stop out (usually I trade without a stop loss), you do not think that I am risking 100% of capital. I am only risking 100% of deposits. This could mean only risking 10% of my capital, or 5% capital, because I always split the deposits into multiple parts.

    Another example:
    Suppose I have $ 1,000. and I split into 10 deposits @ $ 100. Well, if I set 10% risk (of the initial balance) per trade. Or $ 10 per trade. This means that we set 1% risk (of total capital) per trade. Equivalent to $ 10.
    10% risk of initial balance ($ 100) = 10% * $ 100 = $ 10. This is if we calculate in deposit management.
    1% risk of total capital ($ 1,000) = 1% * $ 1,000 = $ 10. This is if we calculate in capital management.

    It is a simple way to understand capital management, maybe I'll make a topic about cash flow management in the other thread. I think we should actually do forex trading as a professional business, not just about market analysis.

    many of us benefit from kinds see. It is considerably critical for your own seller to possess suitable revenue taking care of increasingly being carried out within each buy and sell as well as revenue needed factor. Where kinds see with regards to smashing your own invest, i will declare that the actual definitely not obligatory that folks may perhaps eliminate, you will see reversals and even draw back likewise taking place,

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  3. #62
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    we should trade with a lot of forex confidence and a good strategy and we should not use any bad thing in the forex trading business and we should move with patience and we should not trade with our heart because it always gives us loss and we should not trade with bad thinking

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  4. #63
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    Careful calculation is what will help the trader in this regard, if the trader is working in the manner that gives him lower risk and higher return , the trade will get success in this market over the time. I am certain that doing trading in the of sure trading filtering and lower risk that will get this done only for the trader.

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  5. #64
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    Quote Originally Posted by arafatbd View Post
    Yes Certainly on you to this point, Discovered manage money management accurately. Only capital management will not be sufficient as well, discovered know many other facets like- time control, trading plan, market investigation and some many other important issues with this exchange. When we continue your using a check out to discover, next we must qualified to to view results.
    as traders we must continue to develop in this trade is how trying to get this trade with money management when it can set the money management in this trade then there is a possibility we will bsia achieve success and a sense of security in the trade to be one thing to be in developed in this trade because it would make us feel comfortable in dealing with market

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  6. #65
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    If you ever d not want to lose your money in this market, you will look at the points that will preserve your trading better, this is more important in the way the trader trades with little risk. Even if the risk management you are using is not good enough, the little risk you take will protect the deposit.

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  7. #66
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    I see that the right percent of the money management and the risk management is to consider the 2% or 3% of our capital and do not have risk with more than this percent any time
    always let a good margin free to let the chance to the account balance to pass any reversality of the price

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  8. #67
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    Quote Originally Posted by rinaji View Post
    Do you agree with this...

    No Stop Loss = No Risk Management?

    It is a simple and easy question to answer, maybe we will find many traders who agree with the above sentence.
    I totally agree with this statement. I use to set proper risk on every order I open. But sometimes when My emotion taking control to my head I got spinning and my hand just do many neglect thing. When my emotion is high I get confuse and I open order in bigger lot. I ever use 0,4 lot in standar account in my equity less than 140usd. its killing my account soon.

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  9. #68
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    Quote Originally Posted by jemmy11 View Post
    I see that the right percent of the money management and the risk management is to consider the 2% or 3% of our capital and do not have risk with more than this percent any time
    always let a good margin free to let the chance to the account balance to pass any reversality of the price
    It is at the traders discretion to make sure of their risk appetite prior to trading and perform their homework regarding the risk assessment. When we place the trade there is certain risk involved and it is the traders responsibility to manage the risk only then they can come to the profit edge and this included total account management.

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  10. #69
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    Forex market is world wide market .Any person from any corner of this world can join this market on any time.Just before join this market have to know about the movement of this market.By doing a lot of money you can earn a lot of money from this market.Deposit money and total capital is not same All broker give some bonus on deposit balance.

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  11. #70
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    Quote Originally Posted by jemmy11 View Post
    I see that the right percent of the money management and the risk management is to consider the 2% or 3% of our capital and do not have risk with more than this percent any time
    always let a good margin free to let the chance to the account balance to pass any reversality of the price
    The risk is the main thing nay traders should think of in this regard, the risk the trader is trading with in the market is better of if the risk is low, and if the risk is truly low, it will help the trader so well in handling the difficult situations in the market. It is just the way of careful working that really matters in preserving the capital of the trader.

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